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Reprinted from:
Metal Center News

Software Company Buys MetalSite, ScrapSite

Management Science Associates Inc. (MSA) signed a letter of intent Aug. 22 to purchase the assets of MetalSite Inc., Pittsburgh. Terms of the sale were not disclosed.

MetalSite, an early leader in steel e-commerce, ceased operations June 15 when it could no longer secure sufficient operating capital. The new owners expect to relaunch the site in mid-September. Patrick Stewart, former MetalSite president and CEO, will not continue with the new company.

Metals Supply Alliances LLC, an MSA subsidiary, will purchase the assets, including software and the MetalSite and ScrapSite names. MSA Process Automation Solutions & Services Inc. (MSA PASS), an MSA spin-off, will integrate its real-time scheduling and process control systems with MetalSite and ScrapSite software to reduce operating costs and provide greater value to steel and scrap industry participants.

MSA develops and hosts Internet client applications, so its resources will be valuable in supporting the new firm, said Richard Riederer, founder and chairman of MetalSite and the former CEO of Weirton Steel Corp. Riederer will serve on the new firm�s board of directors.

"We believe MetalSite�s assets are an excellent fit with MSA and MSA PASS," says Alfred Kuehn, founder and chairman of MSA. "We believe the Web has a good future in the procurement and selling of steel, scrap metals and other industrial and commercial products."

MSA�s record of providing a level playing field for clients within highly competitive industries, its success in developing supply-chain systems used by both U.S. and foreign industries, and its experience in working with North American steel producers should help the new venture succeed, Kuehn says.

Importantly, he adds, MetalSite will no longer be handicapped by the perception that it was not a neutral site because it was partially owned by competitive steel companies, including Weirton, LTV Steel, Steel Dynamics and Bethlehem Steel.

"Industry concern about the ownership of MetalSite and ScrapSite, and profits accruing to competitors from use or sale of these exchanges, can now be put to rest," Kuehn says. No firm participating in any MSA supply-chain system for any industry ever quit using it due to bias, or lack of independence or flexibility. "There was also no demonstrated reason to have concern about bias or neutrality in the MetalSite and ScrapSite exchanges," Riederer adds, "but competitive arguments to the contrary can never be proven false."

Despite its financial woes, MetalSite claims to have had healthy usage, handling over 2 million tons of product and conducting over 100,000 auctions. MetalSite more than doubled its revenue and reached a new sales peak in the month before it closed. Likewise, after launching ScrapSite in May 2000, it transacted an additional 200 million pounds of sales among 50 firms, making it the most active scrap-metal market on the Web, Riederer says.

"We are delighted with this transaction," he adds. "With the recent demise of several former competitors, this new, enhanced business-to-business e-commerce solution for the metals industry will be welcomed by a broader group of firms. The new company should be able to provide improved, cost-effective means of generating sales for the entire industry. We feel MSA has the proper vision, and we are convinced that MSA's capabilities and success in other business areas will result in our e-commerce supply chain philosophies, concepts and related services emerging stronger than ever for all steel producers and purchasers."

With more than 800 employees and an average annual growth rate of 18 percent, MSA claims to be one of Pittsburgh's fastest growing high-tech companies. It has more than 300 clients, including some of the largest U.S. and foreign corporations and institutions, and also maintains offices in New York City, Boston, Chicago, High Point, N.C.; Toronto; Cardiff, Wales, and Kuala Lumpur, Malaysia.

MSA PASS is a Pittsburgh-based process automation specialist in turnkey computer and process control, facility-wide management systems for process and manufacturing industries, and systems design. The company is well known for its work in automating steel mills and scrap optimization. For 20 years it has supplied steel and scrap firms with material management systems, integrating standard reporting systems with advanced optimization techniques to lower purchase and receipt costs. MSA PASS also works in the chemical, pulp and paper and other process industries.